Algeria: An Entrepreneur’s Obstacle Course
“Entrepreneurship in Algeria is often full of challenges, but there are no insurmountable obstacles,” says Karim Cherfaoui, CEO of Divona, a local satellite communications company. “Today, it is getting easier to start a business in Algeria: procedures have eased, which has created the great level of inspiration that we have been feeling these past few months. Yet, even though the regulatory framework ensures wide latitude for initiative on paper, as entrepreneurs, we are still bound to provide the link between the various institutions, which wastes a lot of time and energy.” Cherfaoui gives the example of the difficulty that the Ministry of Energy and the Ministry of ICT have in communicating with one another as one specific challenge for Divona, which needs to work with both ministries regularly.
But the big challenge as a local company starting to work in the oil and gas industry, is getting the required experience to compete for tenders as a new company. “To undertake a project, especially when the industry is quite structured as is the case with oil and gas, means that one must be able to create several sub trades before gaining a real foothold into the market.” As it had previously been owned by Monaco Telecom, Divona had references in the sector, and was able to gain a foothold.
“Entrepreneurship in Algeria is often full of challenges, but there are no insurmountable obstacles” – Karim Cherfaoui, Divona
Today, Divona has the highest available authorization for projects in Algeria, allowing it to work for state enterprises such as Sonatrach, following its first work with the NOC in 2007. The company generates 70 percent of its turnover from the oil and gas sector; it has around 50 employees, two thirds of which are deployed on field operations.
RedMed-Group, another locally-born service provider to the oil and gas industry, took a different tack to market entry, targeting private players first. “In 1998, when I took up my duties with the family group, there were very few service providers operating in the country, which is to say none at all,” explains Mohammed Fechkeur, CEO of RedMed. “Large corporations such as multinationals and associates of Sonatrach that operated over large areas in southern Algeria expressed a need in terms of accommodation, catering, in short all of the logistics needed for their back bases. Therefore RedMed-Group was able to step in and provide the necessary facilities while ensuring the safety of camps and base camps.”